PART A

NB. We have scoped out the personnel costs budget of UGX 2.88 bn (60%) due to the reasons outlined below
1 Limited resources available to conduct the audit since the internal audit team has a team of only 2-auditors (one Audit Manager and one audit trainee)
2 The salaries and other emoluments are managed through a centralised agency that has responsibility for all payments for public administration employee and since the introduction of a centralised information technology based personnel and payroll management system the
controls over the entire range of personnel and payment management processes have been more effective in preventing and detecting attempts to manipulate the payroll processes
3 The most recent report of the Auditor General on the payroll control arrangements confirmed that the security and access controls provided a high degree of assurance in its ability to prevent and detect material fraud or other manipulations of the payroll. We shall therefore
place reliance on the auditor general's report with regards to this area.

Area
Non-payroll recurrent expenditure
1
a) Fuel for Ministry transport: Ugx 0.1 bn
b) Office Supplies: Ugx 0.4 bn
Objective Financial risk Reputational risk Operational risk Regulatory or Compliance risk
To evaluate the accuracy and the validity of the fuel The record keeping and recording of
expenditure by the ministry use of Ministry vehicles was poor
hence the risk of financial loss to the
To assess the controls in place to ensure that the fuel ministry.
expenses are accurate and valid. And make
recommendations for resolving identified
deficiencies.
To evaluate the accuracy and the validity of the The lack of a central procurement
office supplies expenditure by the ministry service in the Ministry deprives the
ministry from not taking advantage of
To assess the controls in place to ensure that the discounts from bulk purchasing. This
office supplies expenses are accurate and valid. And exposes the ministry to the risk of
make recommendations for resolving identified financial loss
deficiencies.

c) Utilities (Electricity, Water, Telephone and Internet: To evaluate the accuracy and the validity of the
Ugx 0.3 bn utility expenditure by the ministry with extra focus
on telephone expenses.
To assess the controls in place to ensure that the
utility expenses are accurate and valid. And make
recommendations for resolving identified
deficiencies
Since it was reported that monthly bills The ministry is exposed to the operational
were being paid with no meaningful risk due to over reliance on a sole contractor
checks on whether the calls made especially due to operational failure from the
were in fact official or private. This sole contractor.
exposes the ministry to the risk of
financial loss

d) Repairs and Maintenance of Ministry Transport
(0.025 bn)
To evaluate the accuracy and the validity of the Since for the past 5-years, the Ministry The Ministry is exposed to a reputation risk The ministry is exposed to the operational
repairs and maintenance expenditure by the has been using the same company to that could stem from dealing with a sole risk due to over reliance on a sole contractor
ministry. repair and maintain its vehicle. There’s incompetent service provider for repairs and especially due to operational failure from the
a risk of financial loss due to poor maintenance without competitive bidding. sole contractor.
To assess the controls in place to ensure that these service delivery stemming from lack of
accurate and valid. .And make recommendations for competition.
resolving identified deficiencies

d) Repairs and Maintenance of Ministry Transport
(0.025 bn)
To assess the controls in place to ensure that these Since for the past 5-years, the Ministry The Ministry is exposed to a reputation risk
accurate and valid. .And make recommendations for has been using the same company to that could stem from dealing with a sole
resolving identified deficiencies. repair and maintain its vehicle. There’s incompetent service provider for repairs and
a risk of financial loss due to poor maintenance without competitive bidding.
To assess the controls in place to ensure that these service delivery stemming from lack of
accurate and valid. .And make recommendations for competition.
resolving identified deficiencies. There’s also a potential fraud risk in the
event these funds are embezzled by the
ministry’s personnel which poses a
reputational threat too.
 Area Objective Financial risk Reputational risk Operational risk Regulatory or Compliance risk

e) Cost of Local and foreign Travel: Ugx 0.01 bn &0.025 To evaluate the accuracy and the validity of the Since there were multiple instances There’s also a potential fraud risk in the
bn. foreign travel and local expenditure by the ministry.where advances provided for local and event these funds are embezzled by the
international training were not ministry’s personnel which poses a
To assess the controls in place to ensure that these cancelled through proof of reputational threat too.
accurate and valid. .And make recommendations for expenditure (invoices, hotel bills air
resolving identified deficiencies. tickets etc). This exposes the ministry
to the risk of financial loss.

f) Hiring Specialist Services: Ugx 0.040 bn
To assess the controls in place to ensure that these Since the selection of the consultancy There’s also a potential fraud risk in the
accurate and valid. .And make recommendations for company was non-competitive and event those contracts are awarded through
resolving identified deficiencies. they contract was awarded for 5-years. bribes and kickbacks to the ministry’s
This exposes the ministry to the risk of personnel which poses a reputational threat
financial loss due to potential for too.
To evaluate the accuracy and the validity of the excess charges.
Subsidy to Staff Restaurant expenditure by the
ministry.

To evaluate the accuracy and the validity of the

g) Subsidy to Staff Restaurant: Ugx 0.010 bn Subsidy to Staff Restaurant expenditure by the
ministry.

To assess the controls in place to ensure that these Since the level of subsidy has been Since it is rumored that the company running
accurate and valid. .And make recommendations for decided on an arbitrary basis, there’s a the restaurant is owned by the sister of the
resolving identified deficiencies. risk of financial loss to the ministry. Deputy Minister, there’s a risk of fraud which
may would also pose a reputational .threat
to the ministry

2 Capital expenditure
a) Repair of national highways: Ugx 1bn
To evaluate the accuracy and the validity of the There’s also a potential fraud risk in the The ministry is exposed to the operational
Capital expenditure by a ministry. event those contracts are awarded through risk due to over reliance on a sole contractor
Since the highway repair contracts bribes and kickbacks to the ministry’s especially due to operational failures /delays
have been awarded on a single source personnel which poses a reputational threat stemming from the single contractor.
To assess the controls in place to ensure that these basis to a local company (90% of the too.
accurate and valid. .And make recommendations for value of all highway repair contract
resolving identified deficiencies. buses. There’s a risk of financial due to
over pricing that is associated with lack
of competition.

b) Maintenance of road network: Ugx 0.22 bn

3 Revenue generation
a) Licence fees from commercial vehicles: Ugx 0.2bn.
b) Income from tolls on national highways :Ugx 0.18bn
c) License fees from private vehicles: Ugx 0.1bn.
To evaluate the accuracy and completeness of
revenue earned by the ministry from its different
revenue sources.
To assess the controls in place to ensure
completeness and accuracy of revenue from the
different revenue sources.
And make recommendations for resolving identified
deficiencies.
The ministry does not have a complete
record of all private companies who
have commercial vehicles. This
exposes the ministry to potential
financial loss through revenue
leakages.
Since the tolls for national high ways are The ministry is exposed to the operational
collected in cash and the analysis indicates risk due to over reliance on a sole contractor
an understatement of this revenue line. The especially due to operational failures /delays
ministry is exposed to the risk of fraud. stemming from the sole contractor.

There’s no business plan or rationale

for the planned purchase of 50 license
fees from private vehicles. This
exposes the ministry to potential
financial loss through revenue
leakages.
4 a) Internal control framework. To evaluate the effectiveness the ministries internal
control framework against international framework.
The ministry has issued international level
internal control standards and it does not
fully exercise oversight role to ensure
compliance.
The COSO risk management model principles
are not being fully applied
The above cited issues pose a reputational
risk
The ministry has issued
international level internal control
standards and it does not fully
exercise oversight role to ensure
compliance.
The COSO risk management
model principles are not being
fully applied
The above cited issues pose a non
compliance risk to the ministry.
 Part B
RISKY AREA
1 Non-payroll recurrent expenditure
a) Fuel for Ministry transport: Ugx 0.1 bn
b) Office Supplies: Ugx 0.4 bn
c) Utilities (Electricity, Water, Telephone and
Internet: Ugx 0.3 bn
d) Repairs and Maintenance of Ministry Transport
(0.025 bn)
e) Cost of Local and foreign Travel: Ugx 0.01 bn
&0.025 bn.
f) Hiring Specialist Services: Ugx 0.040 bn
RISK ASSESSMENT MATRIX
Likelihood score Impact Score
Remote /Rare 1 Negligible 1
Unlikely 2 Minor 2
Possible 3 Moderate 3
Likely 4 Major 4
Almost certain 5 Extreme 5
Overall score = Impact * Likelihood score
IMPACT ANALYSIS OVERALL SCORE Rank
Specific risk 1 Negligible 2 Minor 3 Moderate 4 Major 5 Extreme
The record keeping and recording of use of Ministry
vehicles was poor hence the risk of financial loss to
5 3 15 7
the ministry.
The lack of a central procurement service in the
Ministry deprives the ministry from not taking
advantage of discounts from bulk purchasing. This
5 3 15 7
exposes the ministry to the risk of financial loss
Since it was reported that monthly bills were being
paid with no meaningful checks on whether the
calls made were in fact official or private. This
exposes the ministry to the risk of financial loss 3 3 9 18
Since for the past 5-years, the Ministry has been
using the same company to repair and maintain its
vehicle. There’s a risk of financial loss due to poor
3 4 12 10
service delivery stemming from lack of competition.
The Ministry is exposed to a reputation risk that
could stem from dealing with a sole incompetent
service provider for repairs and maintenance
3 4 12 10
without competitive bidding
There’s also a potential fraud risk in the event these
funds are embezzled by the ministry’s personnel
which poses a reputational threat too.
3 4 12 10
Since there were multiple instances where advances
provided for local and international training were
not cancelled through proof of expenditure
(invoices, hotel bills air tickets etc). This exposes the 4 3 12 10
ministry to the risk of financial loss.
There’s also a potential fraud risk in the event these
funds are embezzled by the ministry’s personnel
4 4 16 5
which poses a reputational threat too.
Since the selection of the consultancy company was
non-competitive and they contract was awarded for
5-years. This exposes the ministry to the risk of 4 3 12 10
financial loss due to potential for excess charges.
Like lihood rating
 There’s also a potential fraud risk in the event those
contracts are awarded through bribes and kickbacks
to the ministry’s personnel which poses a 4 12 10
3
reputational threat too.

Like lihood rating

g) Subsidy to Staff Restaurant: Ugx 0.010 bn Since the level of subsidy has been decided on an
arbitrary basis, there’s a risk of financial loss to the 3 3 9 18
ministry.

Since it is rumored that the company running the

restaurant is owned by the sister of the Deputy
Minister, there’s a risk of fraud which may would 3 4 12 10
also pose a reputational threat to the ministry

2 Capital expenditure Since the highway repair contracts have been

a) Repair of national highways: Ugx 1bn awarded on a single source basis to a local company
(90% of the value of all highway repair contract
b) Maintenance of road network: Ugx 0.22 bn buses. There’s a risk of financial due to over pricing 5 5 25 1
that is associated with lack of competition.

There’s also a potential fraud risk in the event those

contracts are awarded through bribes and kickbacks
to the ministry’s personnel which poses a
reputational threat too. 3 5 15 7

The ministry is exposed to the operational risk due

to over reliance on a sole contractor especially due
to operational failures /delays stemming from the
single contractor. 3 4 12 10

3 Revenue generation The ministry does not have a complete record of all
private companies who have commercial vehicles.
a) Licence fees from commercial vehicles: Ugx This exposes the ministry to potential financial loss 5 5 25 1
0.2bn. through revenue leakages.

Since the tolls for national high ways are collected in

b) Income from tolls on national highways :Ugx cash and the analysis indicates an understatement
0.18bn of this revenue line. The ministry is exposed to the
4 5 20 4
risk of fraud.

There’s no business plan or rationale for the

c) License fees from private vehicles: Ugx 0.1bn. planned purchase of 50 license fees from private
vehicles. This exposes the ministry to potential 5 5 25 1
financial loss through revenue leakages.

4 The ministry has issued international level internal

Internal control framework control standards and it does not fully exercise
oversight role to ensure compliance.

The COSO risk management model principles are

not being fully applied 4 4 16 5

The above cited issues pose a reputational risk and

a non compliance risk to the ministry.

Total Score per area

1 Non-payroll recurrent expenditure 148
2 Capital expenditure 52
3 Revenue generation 70
4 Internal control framework 16
PART C
PRIORITISATION BASED ON
Financial materiality
Capital expenditure
a) Repair of national highways: Ugx 1bn
b) Maintenance of road network: Ugx 0.22 bn
c) Utilities (Electricity, Water, Telephone and Internet): Ugx 0.3 bn
Exposure to fraud
a) Licence fees from commercial vehicles: Ugx 0.2bn.
c) License fees from private vehicles: Ugx 0.1bn.
b) Income from tolls on national highways :Ugx 0.18bn
a) Fuel for Ministry transport: Ugx 0.1 bn
b) Office Supplies: Ugx 0.4 bn
d) Repairs and Maintenance of Ministry Transport (0.025 bn)
Reputational sensitivity
f) Hiring Specialist Services: Ugx 0.040 bn
g) Subsidy to Staff Restaurant: Ugx 0.010 bn
Specific risk Risk score Risk rank
Since the highway repair contracts have been awarded on a
single source basis to a local company (90% of the value of all
highway repair contract buses. There’s a risk of financial due
to over pricing that is associated with lack of competition.
25 1
Since it was reported that monthly bills were being paid with
no meaningful checks on whether the calls made were in fact
official or private. This exposes the ministry to the risk of
financial loss. 9 18
The ministry does not have a complete record of all private
companies who have commercial vehicles. This exposes the
ministry to potential financial loss through revenue leakages.
It is also an avenue for fraud
25 1
There’s no business plan or rationale for the planned purchase
of 50 license fees from private vehicles. This exposes the
ministry to potential financial loss through revenue leakages.
It is also an avenue for fraud
25 1
Since the tolls for national high ways are collected in cash and
the analysis indicates an understatement of this revenue line.
The ministry is exposed to the risk of fraud.
20 4
The record keeping and recording of use of Ministry vehicles
was poor hence the risk of financial loss to the ministry. It is
also an avenue for fraud 15 7
The lack of a central procurement service in the Ministry
deprives the ministry from not taking advantage of discounts
from bulk purchasing. This exposes the ministry to the risk of
financial loss. It is also an avenue for fraud
15 7
Since for the past 5-years, the Ministry has been using the
same company to repair and maintain its vehicle. There’s a
risk of financial loss due to poor service delivery stemming
from lack of competition. 12 10
There’s also a potential fraud risk in the event those contracts
are awarded through bribes and kickbacks to the ministry’s
personnel which poses a reputational threat too.
12 10
Since it is rumored that the company running the restaurant is
owned by the sister of the Deputy Minister, there’s a risk of
fraud which may would also pose a reputational .threat to the
ministry
9 18
PART D
Annual audit plans for the audits identified from the previous steps
Audit 1
1 The title or purpose of the audit Capital expenditure audit for the Ministry of Works, Roads and Transport
Scope :
The Audit will last for a 6 months.
a) Repair of national highways: Ugx 1bn
2 The length or duration of each audit
b) Maintenance of road network: Ugx 0.22 bn

3 When the audit will start and when it will finish (elements of the audit Audit cycle time frame
cycle from planning to issuing the final report)
Audit planning (To take 1 month )
- Initial meeting the ministry's officials and obtaining any relevant documentation for planning such as
operational manuals , policies and procedures, copies of contracts etc.
- Risk assessment for the identified risks
- Determination of the materiality threshold
- Agree on the scope of the audit
- Agree on the audit strategy
- Team mobilization and task allocation
- Agreeing on the review timelines etc.
- Determine the budget of all the required logistics for the audit
- Agree on the escalation procedures for issues raised during the field audit.
- Agree on the audit timelines with the ministry as well as the nature of reports expected
Audit execution/ field work (To take 3 months)
- Testing the operational effectiveness of the identified key controls during the planning stage
- Performing substantive reviews and testing of the revenue's earned during the year for completeness and
accuracy
- Ensure timely reviews as per the timelines
Reporting
Prepare the preliminary findings ( with in 1 month) and submit to the ministry's management for feed back
- Incorporate the comments and discuss the findings and recommendations in the audit close meeting (With
on the last month)

4 Resources (human and others) Determine whether there's need for experts such as Engineers, valuers etc.

Assume that all the team will be motivated for the task ahead and no unbearable hostility from the ministry's
officials during the audit.
5 Assumptions - All the parties work with in all means to adhere with the set timelines.
- The auditor will be availed with all the requested information/ documents pertaining the audit.
Audit 2
1 The title or purpose of the audit Non-payroll recurrent expenditure for the Ministry of Works, Roads and Transport
Scope
1) Utilities (Electricity, Water, Telephone and Internet): Ugx 0.3 bn
2) Fuel for Ministry transport: Ugx 0.1 bn
3) Office Supplies: Ugx 0.4 bn
4) Repairs and Maintenance of Ministry Transport (0.025 bn)
2 The length or duration of each audit The Audit will last for a 6 months.
3 When the audit will start and when it will finish (elements of the audit Audit cycle time frame
cycle from planning to issuing the final report) Audit planning (To take 1 month )
- Initial meeting the ministry's officials and obtaining any relevant documentation for planning such as
operational manuals , policies and procedures, copies of contracts etc.
- Risk assessment for the identified risks
- Determination of the materiality threshold
- Team mobilization and task allocation
- Agreeing on the review timelines etc.
- Determine the budget of all the required logistics for the audit
- Agree on the escalation procedures for issues raised during the field audit.
- Agree on the audit timelines with the ministry as well as the nature of reports expected
Audit execution/ field work (To take 3.5 months)
- Testing the operational effectiveness of the identified key controls during the planning stage
- Performing substantive reviews and testing of the revenue's earned during the year for completeness and
accuracy
- Ensure timely reviews as per the timelines

Reporting ( with in 1.5 month)

Prepare the preliminary findings and submit to the ministry's management for feed back
- Incorporate the comments and discuss the findings and recommendations in the audit close meeting (With
on the last month)

4 Resources (human and others) Determine whether there's need for any experts such as Engineers, lawyers, forensic auditors etc.

Assume that all the team will be motivated for the task ahead and no unbearable hostility from the ministry's
officials during the audit.
5 Assumptions - All the parties work with in all means to adhere with the set timelines.
- The auditor will be availed with all the requested information/ documents pertaining the audit.
Audit 3
1 The title or purpose of the audit Revenue sources audit for the Ministry of Works, Roads and Transport
Scope :
1) Licence fees from commercial vehicles: Ugx 0.2bn.
2) License fees from private vehicles: Ugx 0.1bn.
3) Income from tolls on national highways :Ugx 0.18bn

2 The length or duration of each audit
3 When the audit will start and when it will finish (elements of the audit Audit cycle time frame
cycle from planning to issuing the final report)
The Audit will last for a 6 months.
Audit planning (To take 1 month )
- Initial meeting the ministry's officials and obtaining any relevant documentation for planning such as
operational manuals , policies and procedures, copies of contracts etc.
- Risk assessment for the identified risks
- Determination of the materiality threshold
- Understanding the control environment and identifying key controls for testing during the audit field work
- Team mobilization and task allocation - Allocate timelines for each of the identified risky areas based on
materiality and risk.
- Agreeing on the review timelines etc.
- Determine the budget of all the required logistics for the audit
- Agree on the escalation procedures for issues raised during the field audit.
- Agree on the audit timelines with the ministry as well as the nature of reports expected
Audit execution/ field work (To take 3.5 months)
- Testing the operational effectiveness of the identified key controls during the planning stage
- Performing substantive reviews and testing of the revenue's earned during the year for completeness and
accuracy
- Ensure timely reviews as per the timelines

Reporting (With in the last 1.5 months)

Prepare the preliminary findings and report /submit to the ministry's management for feed back in the
agreed formats during the planning stage.
- Incorporate the comments and discuss the findings and recommendations in the audit close meeting (With
on the last month)

4 Resources (human and others) Determine

1. whether there's need for any experts such as Engineers, Statisticians, Economists, Lawyers etc.
2. Need for subcontracting additional resources such as forensic auditors and accountants

Assume that all the team will be motivated for the task ahead and no unbearable hostility from the ministry's
officials during the audit.
5 Assumptions - All the parties work with in all means to adhere with the set timelines.
- The auditor will be availed with all the requested information/ documents pertaining the audit.